Swing Trading Strategies that Work (updated)

A Simple Swing Trading Strategy July 1st, by LuckScout Team in Trading and Investment Swing trading is a simple way to trade currencies which can make great profits and a major advantage of this method is – you don’t need the as much discipline as you need to hold long term trends, as losses and profits come very quickly.

It could be said that position trading also has a relaxed schedule, so is equally suitable for busy traders. Swing trading will also fit those people that have day jobs. November 20, at 5: Of direction, you still must aspect in losses.


Let me share with you why swing trading is one of the most effective approaches, and my favorite methodology of Forex trading Checkpoint Swing trading is the skill of reading a price chart and analyzing the footprint of the swing highs and lows made by the market to accurately forecast price direction.

In the markets its a similar concept, every scenario is different and while we will lay down some general guidelines, these should still be reviewed by you, in light of the individual trading scenario you are looking at. I do not think swing trading can be reduced to pure set rules and an outline of rules which you can review on each pair and pull the trigger on is a far better way of trading.

In terms of swing trading there is no best currency pair to trade, you can trade any of the major currencies or crosses. A typical swing trade, will last from between a day and a week and one point we want to make clear — is that each currency may give you 2 — 4 good swing trades a month.

You only want to trade when the set ups are right! So in conclusion, always be selective in your trading and keep the odds on your side. Below we have outlined the various indicators and the logic behind them and then we will give you some tips on combining them into a simple strategy.

The RSI was introduced to traders by Wells Wilder in in the legendary book New Concepts in Technical trading and is one of the most widely used momentum indicators in Trading. Generally, if the RSI rises above 30 it is considered bullish and on the other hand if the RSI falls below 70, it is a bearish signal. When the market is overbought, RSI Divergence is a great trade setup to go short. We have illustrated a high and low in price with divergence on the RSI.

The RSI is a tool which is useful but it is not effective on its own in our view and should be used as a back up tool and we like to use it in terms of supporting our favorite timing indicator the stochastic. This is an indicator which was developed by George C. Lane in the late s and while its been around for half a century, we still consider it the ultimate indicator for timing trading signals and its based on a very simple concept:. Below 20 is considered oversold and above 80 is overbought.

However, reading below 20 or above 80 does not mean that the market will reverse. When using the stochastic by its very nature you will get a lot of false signals so you need to trade extremes if using it on its own — you can trade levels which are not extremes and we will look at how to do this in a moment and how to filter signals.

Therefore, it is recommended to read that article to learn about Bollinger Bands in details: How to Use Bollinger Bands. This simple method combines the volatility of the Bollinger Band to isolate overbought and oversold levels to set up possible swing trading scenarios and adding the RSI and Stochastic in as the timing indicators to enter the trades. Lets take the graph we have just looked at above and add these indicators in:.

Please read it to learn about MACD and the way it can be used: Now lets take the above chart and add in the indicators above and see what the combination looks like and how the indicators come together. We use the stochastic as our main tool to enter trades and the advantage of combining it with the MACD is that it will allow you to filter trades better in terms of entry — this will become clearer if we look at some charts.

Look at the MACD lines in view of — the further away from the centre line the better in terms of spotting trading opportunities. If the stochastic is at an extreme and the MACD line is losing momentum — your signal to sell, can be from the stochastic so long it is overbought or oversold.

You should also on all highs and lows, watch the MACD histogram for additional confirmation of falling momentum. When setting a target, this will depend on how extreme the move is — but as a general rule, we always look for support or resistance levels, around the mid Bollinger Band in strong trends.

I salute your article, Mr Peter M. The technique is rather specific. I have learnt a lot. My views on reading the physcology of the candle sticks behaviour couple with this other systems will give me a less risk decision. Is a technical indicator developed by John Bollinger designed not only to spot overbought and oversold territory in the markets but it also gauges the market volatility.

This swing trading indicator is composed of 3 moving averages: The figure above should give you a good representation of how the Bollinger Bands look like.

Most trading platforms come with this indicator in their default list of indicators. The preferred setting for the swing trading indicator Bollinger Bands indicator are the default settings because it makes our signals more meaningful. We reached this conclusion after testing the strategy based on several inputs. Before we go any further, we always recommend writing down the trading rules on a piece of paper.

Also read our Forex success program. Our simple swing trading strategy is really just comprised of two elements. The first element of any swing strategy that works is an entry filter. The second element is a price action based method. The first element we want to see for our simple trading strategy is that we need to see price moving into overbought territory.

Any swing trading strategy that work should have this element incorporated. After we touched the upper Bollinger Band, we want to see confirmation that we indeed are in overbought territory and the market is about to reverse. The logical filter, in this case, is to look after a break below the middle Bollinger Band. This break below middle Bollinger Bands is a clear signal in the shift in market sentiment. In this regard, we want to see a big bold bearish candle that breaks below the middle Bollinger Band.

The second element of this candlestick based method is that we need the breakout candle to close near the low range of the candlestick.

This is indicative of strong sellers, which really want to drive this currency pair much lower. Every swing strategy that work needs to have quite simple entry filters. In this manner what is a swing trade stocks,. Of direction, you still must aspect in losses. Smaller gains can most effective produce boom to your portfolio if losses are saved small best trading techniques. This could keep you at 3 to 1 earnings to loss ratio, a legitimate portfolio control rule for fulfillment.

Swing trading can nevertheless supply larger profits on person trades. A stock may additionally exhibit sufficient initial strength that it may be held for a larger benefit what is swing trading in stock market,. Although the can slender making an investment device is constructed for longer-term funding durations, its regulations can nonetheless apply in a swing buying and selling environment.

Take breakouts from consolidations. Previous uptrends are a need to. Sideways movement that resists giving up plenty floor is favored.